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invest in 2016
ELSS or Equity Linked Savings Scheme of Mutual Funds are one of the best tax saving cum
long-term wealth creation investment tools. The investments made in ELSS schemes are eligible
For salaried employees, the deadline to submit theInvestment Proofs to save income tax is fast
between January and March. It is often observed that during this period many
investors/employees who have not done their tax planning rush to buy unwanted life insurance
Do note that ELSS Tax saving mutual funds come with a lock-in period of three years; the lowest
among all the tax saving options that are available under Section 80C. (PPFs lock-in period is
15 years, Tax saving Bank Fixed Deposits is 5 years, National Saving Certificates is 5 years
etc.,)
I had written an article on Best Tax Saving Mutual Funds to invest in 2015. The Top 5 best
Let me present you the latest & updated list of the best ELSS tax saving mutual fund schemes
If you have already invested in any of the above funds, you may continue with them and keep a
track of your investments. If you are new to ELSS funds, you may consider the below Top
ten years the average returns generated by ELSS fund category are around 10% & 12%
respectively.
Let me first list down the top performing Equity Linked Saving Schemes purely based on the
investment returns (past performances). I have considered both lump sum as well as SIP returns
for the past 5 years to 10 year period. I have considered only those funds which are at least 6
years old.
8. ICICI Prudential Long Term Equity Fund Tax Saving Regular Plan
HDFC Tax Saver Fund is missing from the list when compared to my top 10 2015 list. Kindly
note that ICICI Pru Tax Plan has been renamed as ICICI Pru Long Term Equity Fund.
Top 6 Best ELSS Mutual Fund Schemes for SIPs or Lump Sum Investments in 2016
Below parameters have been considered to shortlist the 6 top performing ELSS mutual funds that
I have considered the past returns generated by these funds for the last 5
Funds with a good track record for the last 5 to 10 years have been preferred.
. I have considered only those funds which are at least 6 years old.
ELSS Funds which have low risk grade have been given comparatively higher
rank. Due importance have been given to Standard Deviation, Alpha, Beta,
portals, I have also used few mutual funds calculators available at freefincal
portal.
Morningstar portals mutual fund screener has been used to filter funds
based on fund performance & risk (risk adjusted), standard deviation, fund
The fund returns Vs fund category returns have been given due importance.
Like last time, in this review too I have not considered the STAR ratings of
funds provided by ranking agencies. Usually these star ratings reflect the
o This ELSS funds strategy has been to buy quality large caps or
o The funds portfolio has around 70% exposure to Large Cap companies.
investor who would like to get decent investment returns with a low-
risk profile.
per month for the last 10 years, the accumulated investment value
would have been Rs 2.83 Lakh.
o This fund has one of the highest AUMs in the Equity MF market.
o The fund performance in the last 5 year period has been stupendous,
o This fund can be considered as a true MULTI-CAP fund within ELSS fund
o This fund also has invested primarily in Banking sector & Automotive
stocks.
o This fund has taken a hard knock in bear markets of 2001 and 2008.
o ICICI Pru Tax plan has been renamed as ICICI Pru LTE fund.
o This fund has been consistently beating the benchmark (Nifty 500) and
companies.
o If you have invested in a Systematic Investment plan (SIP) of Rs 1,000
per month for the last 10 years, the accumulated investment value
The other funds to watch out for are BNP Paribas Long Term Equity Fund, TATA India Tax
Savings Fund, Reliance Tax saver, Religare Invesco Tax Plan, DSP Blackrock Tax Saver
note that this fund has one of the highest Standard Deviations in ELSS fund
TATA Tax Saving Funds standard deviation is one of the lowest of all. It has
low fund risk grade. But getting abnormal returns from this fund may not be
possible.
Canara Robeco Equity Tax Saver Fund has given returns of 16.5% during last
10 years. This is one of the highest among all the above funds. The fund has
Important points
Your investment in ELSS funds is LOCKED for a period of 3 years. So, Long
Term Capital Gains taxes are not applicable. But, do not invest in ELSS fund(s)
with a mind-set of redeeming the fund units as soon as the lock-in period gets
over. Kindly note that these are risk-oriented products. You may have to stay
ELSS funds can create long-term wealth for you. Suggest you not to opt
You may select one ELSS fund for tax saving cum investment purposes. It is
advisable not to invest in too many funds within the same fund category. (You
fund agent.
Do not get confused between ULIPs (Unit Linked Insurance Plans) and ELSS